THE HAYWARD CHARITABLE TRUST MEDIA RELEASE

8 December 2009

Notice of Arbitration onder the Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the for the Promotion and Protection of IDvestmenq dated 30 April 1982

The Hayward Charitable Belize Trust (Hayward) wishes to infonn the public that on 4 December 2009 its subsidiary, Dunkeld International Investment Ltd. (Dookeld) commenced arbitration proceedings against the Government of Belize' (the Government). These proceedings were commenced under the Arbitration Rules of the United Nations Commission on International Trade Law and in accordance with an international agreement between the Government of the United Kingdom and the Government for the Promotion and Protection of Investments dated 30 April J982 (the Treaty).

Dunkeld alleges that the Government has breached several obligations which the Government owed to Dunkeld under the Treaty. In general terms, Dunkeld alleges that the Government has unlawfully expropriated Dunkeld's investment in Belize Telemedia Limited (Telemedia) and has failed to treat Dunkeld fairly and equitably. In order for the public to be infonned properly, DunkeJd's Notice of Arbitration is attached.

Prior to the nationalisation of Telemedia on 25 August 2009, Dunkeld was the beneficial owner of approximately 69% of the shares in Telemedia. Dunkeld is a company established in the and is an investor protected by the Treaty as a result of an exchange of notes between the Government of the United Kingdom and the Government extending investment protection to the Turks and Caicos Islands. The exchange of notes was signed on behalf of the Government of Belize in 1985 by the current Prime Minister of Belize, Hon. , when he was the Minister of Foreign Affairs.

On 27 August 2009, Dunkeld fonnally notified the Government of a claim under the Treaty arising out of the nationalisation of Telemedia. Dunkeld informed the Government that it remained willing to seek amicable settlement of the dispute. The Government did not respond to Dunkeld in relation to this proposal.

Hayward is disappointed that the Government has not entered into any discussions in order to bring about an amicable settlement of the dispute. Hayward is a charitable trust the beneficiaries of which will substantially be Belizean causes. Bearing this in mind, Hayward remains very flexible in both the amount and timing of the compensation but remains surprised and disappointed that the Government continues to be unwilling to negotiate a settlement that is in the interest of all ; especially when the Belize economy is worsening and the continued dispute over Telemedia is having such a profound impact on all Belizeans. IN THE MATrER OF AN ARBITRATION UNDER THE ARBITRATION RULES OF THE UNIl'ED NATIONS COMMISSION ON INTERNATIONAL TRADE LAW 1977

AND

PURSUANT TO THE 1981 AGREEMENT BETWEEN mE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE GOVERNMENT OF BELUZFORTREPROMOTIONANDPRO~ONOF~~

BETWEEN:

DUNKELD INTERNATIONAL INVESTMENT LTD.

C...... at

-v-

THE GOVERNMENT OF BELI.ZE

R.espoadeat

NOTICE OF ARBITRATION

4 December 2009

AIleD " Overy LL. One Bishops Square London El 6AD United Kingdom

Tel: +44(0)20 3088 0000 Fax: +44(0)2030880088 Rct': JAEGIMPGlAAMW 1. INTRODUCTION

1.1 This Notice of Arbitration (the Notice) is served by the Claimant, I>u.nkeld International Investment Ltd. (Dunbld or the Claim.. t), on the Respondent, the Government of Belize (the Govel1lDleat or the Respondeat), pursuant to:

(a) Article 3 of the Arbitration Rules of the United Nations Commission on International Trade Law 1977 (the UNCITRAL Rales); and

(b) Article 8 of the 1982 Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Govcmmcnt of Belize for the Promotion and Protection of Investments (the Treaty').

1.2 Dunkeld demands that the dispute which is set out in this Notice be referred to arbitration in accordance with Article 3 of the UNCITRAL Rules and with Article 8 of the Treaty.

1.3 The dispute to which this Notice relates 00IlCemJ the Govel11lDCl1t's disregard for the vested rights of Dunkeld who is a foreign investor entitled to protection under the Treaty. Dunkeld was the beneficial owner of approximately 69% of the shares in Belize Telemedia Limited, a company incorporated in Belize (felemedia). At all material times, Telemedia baa been the largest owner and operator of telecommunications and other media services in Belize. On 2S August 2009 the Government enacted the Belize Telecommunications (Arnen.drnent) Act 2009 (the Ae1i. which enables it to acquire compulsorily all such property as the Prime Minister, with the approval of the Minister of Finance, considers necessary to take possession of and assume control over telecommunications in Belize. On 2S August 2009 the Minister responsible for teleoommunications made the Belize Telecommunications (Assumption of Control over Belize Telemedia Limited) Order, 2009, Statutory Instrument No. 104 of 2009 (the Order»), By this Otder, approximately 94% of the shaJ:es in Telemedia were acquired for and on behalf of the Government, including those shares which were beneficially owned by Dunkcld. This action was in breach of the Government's obligatiOIll to Dunkeld, which hal the status of an investor under the Treaty.

1. THE TREAT\'

2.1 The Treaty is dated 30 April 1982, approximately se'YCIl months after Belize, formerly , gained its independcnc::c fi'om the United Kingdom, and came into force on the same date in accordance with its Article 12. It remains in foree today.

2 2.2 Article 11 of tho Treaty provides:

"At the time 0/ signalure 0/ this Agrvement. or at any time thereafter. the provisions 0/ this Agreement may be extended 10 such lemtories for whose international relations the Government of the United Kingdom are responsible as may be agreed between the Contracting Parties in an Exchange ofNotes. "

2.3 The Treaty was extended by Exchange of Notes to the Turks and Caicos Islands on 10 Dec:embcr 1985 (the Exchange of Notes)."

2.4 The preamble to the Treaty records that the intention of tlu:: Contracting Parties was to enhance their mutual economic prosperity through the promotion and protection of investments by the nationals of each state in the teni.tory of the other. The preamble provides:

"The Government of the United Kingdom 0/ Great Britain and Northern Ireland and the Government o/Belize:

Desiring to create favourable conditions for greater investment by nationals and companies ofone State in the temiory ofthe other State;

Recognising that the ertCOumgement and reciprocal protection under international agreement of such investments will be conducive to the stimulation of individual business initiative and will increase prosperity in both States;"

2.5 The Treaty's object and purpose is the promotion and protection of investment flows between Belize and the United Kingdom and with other territories to which protection was extended under Article 11, such as the Turka and Caicos Islands. As dcsc::ribed briefly below, the Government bas acted in disregard of the intentions expressed in the Treaty and in violation of the international legal obligatioll:l to which it agMCd to be bound.

3. THE AGREEMENT TO ARBITRATE

3.1 Article 8 of the Treaty provides:

"( 1) Disputes between a national or company of one COlltracting Party and the other Contmcting Party concerning an obligation ofthe latter under this Agreement ill relation to an Investment of the formu which have not been amicably settled. shall after a period of three months from written notijlcallon 0/ a claim be submitted to international arbitration if either party 10 the dispute so wishu."

"(2) Where the dispute is referred to international arbitration. the iffVl!!ltor and the Contracting Party concerned in tire dispute may agree to nrfer the dtrpute either to--

(a) the International Centre for tAe Seuleme1u of Investment Disputes (having regard to the

3 provisions, where appIiroble, of the Convention on the Settlement of Investment Disputes between States and Nationals of other States, opened for signature at Washington D.C. on 18 March 1965 and the Additional Facility for the Administration ofConciliation, Arbitration and Facl-Finding Proceedings),' or

(b) the Court ofArbitration ofthe International Chamber ofCommerce; or

(c) an International arbitrator or ad hoc arbitration tribunal to be appointed by a special agreement or established under the Arbitration Rules ofthe United Nations Commission on International Trade Law.

ifafter a period ofthree montlu from written notification of the claim there is no agreement to an alternative procedure, the parties to the dispute shall be bound to submit it to arbitration under lhe Arbitration Rules ofthe United Nations Commission on International Trade Law as then in force. The parties to the dispute may agree in writing to modify these Rules."

3.2 By letter dated 27 August 2009. Allen &; Overy LLP, on behalf ofDunkeld wrote to the Oovcmmen:t and notified a claim to be submitted to international arbitration in aceordance with Article 8(1) of tile Treaty. A period of three months has passed sincc: Dunkeld notified the Government of its claim and the dispute has not been amicably settled. Dunkeld now refcrl the dispute to international arbitration.

3.3 By the terms of Article 8(1), the Government expresses in writing in advance its generic and unequivocal consent to submit disputcs to international arbitration. By serving this Notice. Dunkeld accepts the Government's offer to submit this dispute to international arbitration in accordance with Article 8 olthe Treaty.

3.4 By the above mentioned lcUcr dated 27 August 20096 and a further letter dated 24 September 2009 , ' Allen &. Overy LLP, on behalf of Dunkeld, uked the Government to indicate which of the above means of international arbitration it would propose for the dispute. The Oovenunent has not responded to this request and accordingly the Parties have not agreed on the means of international arbitration. Therefore. under Article 8(2) of the Treaty, the Parti(:$ are bound to submit the dispute to arbitration under the UNCITRAL Rules.

, A eop:y ottbo \cUcr hen A11a!.I: Omy U.P 10 die ~ dIIal27 Avc-t 2009 i. pRNbaI .. EUIbII C-5. • It!I.WWt (:-11. 1 A eop:y otlhc Idkr hen Allen .I: Omy U.P 10 tile ac-u.t .... :u ...... *" ill pI'OfiIIcoIl .. 1EdIIIIk (:~. 4. APPOINTMENT OF THE TRIBUNAL

4.1 Dunkcld proposes that the arbitral tribunal shall comprise: three arbitrators. Dunkcld notes that. under Article 5 of the UNCITRAL Rules, if the Govcrmncnt does not agree with this proposal within fifteen days of receipt of this Notice, a three member arbitral tribunal shall be the default position.

4.2 In accordance with Article 7 of the UNCITRAL Rules, Dunkcld appoints John Beecher to act as a member of the Arbitral Tribunal. Mr Bccchcy's contact details are as follows: Strictly private and confidential- addressee only Mr John Beechey Chairman ICC International Court of Arbitration 38 Cours Albert lcr 75008 Paris France Fax: + 33 I 49 53 2929

4.3 The Parties have not previously designated an appointing authority. By letter dated 24 September 8 2009 , Allen & Overy LLP, on behalf of Dunlcetd, proposed to the Government that the Court of Arbitration of the International Chamber of Commerce act as the appointing authority for the purposes of Article 7 of the UNCITRAL Rules. The Government has not repJied to this proposal. Dunkeld notes that, failing agreement between the Parties, the appointing authority shall (ifrequired) be designated in accordance with Article 7(2)(b) aftho UNCITRAL Rules.

5. SEAT OF TOE ARBITRATION

5.1 The Parties have not agreed upon a seat of the arbitration. Dunlceld recognises that it is, therefore, for the Tribunal to determine the scat of the arbitration in accordance with Article 16(1) of the UNCITRAL Rules.

5.2 Dunkeld suggests that the Tribunal, once constituted, fixes the seat in a neutral venue which is also well recognised as a seat of international arbitrations. In this regard, Dunkeld SUggclSts Geneva, Switzerland, being both a neutral venue:: and also one which is well established as a venue of international arbitration. Dunkeld is, however, equally content for the scat to be fixed in any other neutral and well-recognised aubitral venue. By virtue of Article 16(2) of the UNCITRAL Rules, the

fixing of the seat does not of COUl'le require the Tribunal to bold hearings at the place of the seat.

·,...... C-6.

5 6. THE PARTIES

9 6.1 The Claimant, Dunkeld, is a company registeRid in the Turks and Caicos Islands , whose registered office is: Box 97 No. 1 Caribbean Place Leeward Highway Providencialcs Turks and. Caicos Islands

6.2 As such, Dunkcld is a "company" of the Turks and Caicos Islands (being a territory to which the Treaty was extended under its Article 11), under Article l(dXi) of tile Treaty, which Article:: l(d)(i) provides: "(d) "companies" means: (i) in respect of the United Kingdom; CorporotiOrlS, firms or associations incorporatlNi or constituted under the law in force in any part of the United Kingdom or in any territory to which this Agreement is extended in accordance with the provisions ofArticle J1".

6.3 Dunlceld has authorised Allen & Overy to IICJ'VC this Notice on its behalf.

6.4 Dunkeld's representatives are:

Allen & Overy LLP One Bishops Square London EC16AD United Kingdom Tel: +44 (0)20 3088 3000 Fax: +44 (0)20 3088 0088 Email: [email protected]; matthew.gearing@allenoverv,com; angeline. welshtqlaJJenovery.com

For the attention of luditb Gill QC, Matthew Gearing, Angeline Welsh.

6.5 Dunkeld confinns that it is content for all communications addressed to Dunkeld to be sent only to Allen &. Overy LLP at its London office above.

6.6 The Respondent, the Government of Belize, is a sovereign State and a Contracting Party to the Treaty. Belize's contact details are: The Honourable Dean Barrow Prime Minister and Minister of Finance Office of the Prime Minister Belmopan City Cay<> District Belize Fax: 00 501 822 0898

• 6.7 Dunkeld confirms that this Notice of Arbitration, together with Exhibits, is being served on the Prime Minister and Minister of Finance, the Hon. Dean Barrow (the Prime MJaister) at the above address, with a copy also being served on the Attorney..Qencral, , the principal legal adviser to the Government: The Honourable Wilfred Elrington The Attorncy-Gcncral ofBelizc The Attorncy-Gcncral's Ministry 2nd Floor East Block Building Belmopan City Belize Fax: +501 8223390

7. GENERAL NATURE OF THE CLAIM

TIu! /.m.1Ii kc:igrolUUl to the .",.

7.1 Telcmedia is the statutory successor to Belize TelccoUllDWlications Limited (BTL). BTL owned and operated telecommunications and other media services in Belize from 1987 until its dissolution in May 2007 (see below). Up until Deocmbcr 2002, Bn. was the monopoly telecommunications service provider in Belize. At the time of its dissolution in May 2007, BTL was still the largest operator in this industry in Belize, with the second largest operator, Spcednct Communications Limited, growing its business and having achieved 20'111 of the cellular market.

7.2 In carly 2004, the Government purported. to take over BTL and then to sell it to a company called Innovative Communication Corporation LLC (ICC), run by a US entrepreneur called Mr. Prosser. ICC entered into an agreement with the Government to purchase over 800Al of the issued share capital of BTL in March 2004. Ultimately ICC was unable to advance the funds necessary to pay for the majority of the shares which bad been transferred to it.

7.3 Therefore, in February 2OOS, the Govermnent exercised its seeurity over the unpaid shares and effectively took back control of BTL from ICC. There followed a plethora of subsequent litigation and arbitration proceedings in Belize, Miami and Canada between ICC, related Prosser entities and BTL and the Govermnent concerning the circumstam:es of the abortive Prosser take over and the ability of the Government to re48kc control. In Action Nos: 179 and 190 of 200S before the Supreme Cowt of Belizc. a claim which related to the intcrpmation ofthc articlcs of BTL. the Chief Justice commented in giving judgment that BTL: "... is tlte hapless and captive prey that is the

aubjecr ofall these proceedinp.... 0

7.4 During ICC's control of BTL, the business sutTered. substantial deterioration because ICC failed to implement BTL's planned improvements and developmontt. By 200S both the industry and BTL

7 were in tunnoil. Actioos of the previous Government and of the DlIlII8FInet1t of ICC bad led to a rapid deterioration of the infiutructure and investment previously made (principally by BTL), putting the development and growth of the industry back several years. In April 200S, the twmoil and lack of effective It'Iat'IIIgelllt resulted in a fWl nationwide shut down of all national telecommunications services by BTL employees. with significant disruptions to services. including intemationallinks, lasting for around 10 days.

7.5 It was against this background that the Government sought to enlist the assistance of the former management and shareholders of BTL, in order to take this rapidly developing and technologically complex industry forward in Belize. Discussions between the Government, BTL's management and the former management and Wreholders of BTL led to an important agreement relevant to the future direction of the industry in Belize. In summary, BTL and the Government agreed that BTL would, further to the policies of the Government, set up an infrastructure through whlch a sophisticated telecommunications network could be established and developed in Belize. In retwn, the Government agreed to provide certain guarantees, benefits, covenants and undertakings, including certain tax and duty exemptions.

7.6 Accordingly, on 19 September 2005, BTL and the Government entered into an accommodation agn:ement (the OriPW Aecommodatioa A.greeIReIIt)." The Original Accommodation Agu=eaDellt was subsequently amended by a Deed dated 21 November 2005 (the PInt AmeIlcIJneIlt Deed), and also by a Settlement Deed dated IS December 2006 (the SecoRd Ameadmellt Deed). both made

between BTL and the Government, Il Telerncdia and the Govcmment entered into a further

Settlement Deed dated 7 January 2008 (the nlrd Ameadmeat Deed), Il The Original Accommodation Agreement and the First, Second and Third Amendment Deeds are referred to together in this Notice as the AecollllllOdatio. Aanemellt. The Accommodation Agreement operated successfully following its inception for a period of some two and a half years until the change of government in Belize in February 2008.

7.7 On 15 September 2006, BTL entered into a business transfer agreement with Tclemedia, pursuant to which BTL agreed to tnmsfcr its busineu to TeiCIrM:dia (the Ballum Trall"er Agreemeat). On 29 May 2007 the Belize Telecommunications Undertaking (Belize Telecommunications Limited Operations) Vesting Ad (the Vatiac Act) wu assented to by the Govc:mor General of Belize and was made law. Pursuant to the provisions ofthc Vesting Act, all of tile assets, liabilities, rights and obliptions, property. files and documentation of BTL which had been agreed to be transfcm:d pursuant to tbe Business Transfer Asreemcnt (including the Accommodation A.grccment) were

• vested in Telcmcdia. BTL was declared diaolved and references to its name in the register of companies maintained by the Registrar of Companies were dccmcd struck off.

7.8 On 8 February 2008 the government administration in Belize changed following a General Election. The existence and implementation of the Accommodation Agn:ement became a highly politiciscd issue in Belize following the General Election. The new administration, and in particular the new Prime Minister and Minister of Finance, the Hon. Dean Barrow, took exception to the Accommodation Agreement and sought publicly to discredit both Telemcdia and the former administration. The Prime Minister decided the Accommodation Agreement a "secret" agreement and one which the Government would not now honour. For example, in an interview with the Love FM radio station on 11 April 2008'4, the Prime Minister made clear that he had no intention of honouring the Accommodation Agreement. In particular he said:

"What's happening with BTL is thai we were confronted immediately with a position taken by the local management of BTL that there wtI3 this secret agreement thai had been signed by the last government that committed us to all :lOrts of extraordinary in my view concessions to be given to BTL. I indicated that I d(m't care, I am not going to abide by such agreement ... " .

7.9 Furthermore, on 2S April, 2008 the Prime Minister made similar comments to the House of Representatives in Belize, in particular referring to the Acconunodation Agreement as:

n[a] .~ecret agn:ement as ;1 were handcuffing the government, shacJciing the government, making it impossible legally, contractually for the government to do anything about rates because that agreement guaranteed BTL a rate of return of 15% and saJd that if BTL didn'l make that rate ofreturn they could withhold their payment of their business tax, which they have done for the past three months. But we are not going to tolerate that and I want the public to know that."IS

7.10 Disputes arose as to whether Telemedia wu entitled to rely upon the Accommodation Agreement and on 9 May 2008 Telemedia filed a Request for Arbitration with the LCIA (LCIA ArbitratiOD No. 81079). The Government was given full and repeated notice of the proc:eedings (by Telemcdia, the LCIA and the tribunal), but tailed or refused to take any part in them.

7.11 By letter dated 13 June 2008, the lelA Court appointed a tribunal consisting of Mr Mark Kantor, Mr Rory Brady and Mr Alan Redfern (the LCIA TrlhDII). Mr Brady withdrew due to illnels. On 24 October 2008 Ms Paula HOOp was IppOinted by the LelA to replace Mr Brady.

7.12 On 18 March 2009, the LCIA Tribunal ilia. final and binding award on the merits in favour of Telcmedia (LCIA Award No. 81019)1'. The LelA 81079 Award upheld the validity of the

14 A copy ofIllI111iOf1"IIdaI u.ecript Dr.-Prime MinIIla'a ~ wiCk die LOrB (1M nldio uiGe 01'1 II Apdl200l it JII'OCfuocd a IIlllWt C-l3. U A copy or .. -«'Ie. u.ucriptof"-~ .pmducaI.IE...... C.14. First, certain declaratory relief in respect of the Government's obligations under the Accommodation Agreement. Secondly. an award of damages of BZS38,527,083.87 payable by the Go'mDDlllmt to Telemedia in respect of the Government's breaches of the Accommodation Agreement up until 27 February 2009. together with Tclemedia'l costs relating to the arbitIation bearing.

7.13 On 20 March 2009 Tele:media assigned the benefit of the LClA Award No. 81079. in so far as it orders the payment of certain damages and costs by the Government to Telemedia, to Belize Social l Development Limited, a company incorporated in the British Virgin Islands '.

7.14 The Government has not complied with LClA Award No. 81079.

7.15 Continuing the stance adopted previously of public disavowal of the Accommodation Agreement, on Friday 24 July 2009, the Prime Minister made the following com.rr:tents to the House of Representatives in Belize:

"This business ofsuggesting IhtJt we are anti-investors is a way to try and get a'Way from the fact that this govel7Ul'lent is above all nationalistic and will not countenance the kinds of arrangements with so called investors that are clearly and egregiously and flagrantly against the interf!Sts ofthe Belizean people in order for us to demonstrate for the member for Fort George that we are pro-investment we must for example countenance the Accommodation Agreement. You talk about confrontation. weill will tell you there will be confrontation with any illWStOl' with whom you have ligned the kind ofagreement that is of the sort that we see ,.prettented in the infamous aCCOl'll1ftOdation agreement."'s

7.16 By letter dated 24 August 2009. Allen & Overy LLP on behalf of Tclemedia wrote to the Government and accepted the Government's repudiatory breach of the Accommodation Agreement, l9 choosing to treat the agreement as being at an end •

&Ike T~,,"iatltHa (A. ...II""""'J Act 1", tutti S,.",tory l"""""'ell' No. JtU _f20119

7.17 On 24 August 2009. the Prime Minister tabled the Act in the House of Representatives. In his speech to the House of Repre3Cl1tativcs when tabling the Act, the Prime Minister said:

"As soon as we discovered this Accommodation Agreement and the fact that it had been secretly signed and secretly implemented by tile PUP. we came to the Belizean public and denounced it. Lord is an extremely powerfol man. His net worlh may well be equal to Belize's entire GDP. He i, nobody to cross and the new government could well have chosen the pot/J of least resutance,' to cower in tile face of the certain wmth of this potentate,' to continw in the PUP style with businus as tuual; 10 betray. itl other words. all that we had campaigned fOl'. all that we had promised, and all that is basic and decent and straiglcl foT"lNtl.rd if the,. is to be fllIY ounce of trust left in public oJ!ice. But betrayal of tire people is not in my nalt.lnl, and not, 1 am IW"pOSlingly proud 10 .ray. in the nature of the United Democratic Party.

16 AlXlpforthe LelA Award No. 110'19 iIIpmducoda EUlWtC-IS. 11 A copy oflhc auipmtmt fi'onI r ...... IkIizIc Sor.:iat ~ LiDIkecI ... 20 Mild! 2009 is ~ II ElIlIHIIt c.... IS A lXlpfoftbc a-.:I7 .nicle~ "Slid M_lIck ill DiIIIIIof_" ..,14J\IIJ 2.009 ilpIIIIb:aI u EsIIIWt C.l? 19 A eopy oflllto ...dilled 24 AIapIt 2.009 fiom AI_ A Ootery u.p.1IIto ~ ill JIIQdIIeed .. EldAIt C.II.

10 And .'10 we took counsel among ounelves and 10 a man the UDP cabinet voted, in the name of the Belizean people. to resist this treasonous Accommodation Agreement at all costs. Belizean Law and Belizean dignity would be upheld: Belizean pride and Belizean patriotism and Belizean patrimony vindicated.

And. ofcourse, resisted we have. Now no one can doubt the justice ofour skmd. But, as we always knew, it has been cost/yo Michael Ashcroft had Telemedia invoked arbitration in London to enforce the Accommodation Agreement. And he obl4ined a judgment of 38.5 million dollars and a court - mandated requirement that government now begin to honor the Accommodation agreement.

Well, I have said that as God is my witness / will never pay that award. But it doesn't stop there. In April of2()()9 Telemedia informed the goYernment offurther claims they will make to the London Court of Intemational Arbitralion, and that the size of a new award "could pale the current award of38 million into insignificonce ".

Mr. Speaker, Members, fellow Belizeans: thts is intolerable. l and the United Democratic Party Government, in the name of lhe people will put up with it no lon~r. That an agreement so patently illegal. so patently immoral. so patently anti-Belize. should continue to torture us, to bleed us, to subject us to this death by a thousand cuts, cannot for one second more be countenanced. This is our House. thts iif our country. Here we are masters, here we are sovereign. And with the full weight ofthaI sovereignty we must now put an end to this disrespect, to this chance taking. to this new age slavery, There will thus be no more Telemedia awards against us; no more Telemedia court battles; no more debilifQting waste of goYernment:t energies and resources; and there will be no more suffering of this one man's campaign to subjugtlte an entire nation to his will. After long and sufficient consideration, therefore, and in the exucise of that national power that is ours by Constitution and inalienable right. this government will now acqwre TeJemedla, n20

7.18 All three readings of the Bill were completed in one day. The speed with which the legislation was passed was exceptional. The members of the House. including the Opposition were presented with the Bill that morning, leaving little, if any. room for debate in the House in relation to this extraordinary measure. Prime Minister himself stated that the lack of notice of the legislation was to be nregretted" but explained that this was a deliberate move by the Government to frustrate opposition to this measure. On 25 August 2009, the Bill was pascd by the and submitted to the Gowmor General who gaw hi. assent thereto.

7.19 Section 63 (Asswnption oCcontrol by Government on revocation of licence or for a public purpose) of the Act provides:

"63. (1) Where the licence granted to a public utility provider is revoked by the Public Utilities Commission. or where a licensee ceases operations or loses control of operations. or where the Minister considen that control over telecommunications should be acquired for a public [JUf'[JO$e, the Minister may. with the approval ofthe Minifler ofFinant:e. by Order published in the Gazette. acquire for and on behalf of the Govern,."" ai, me" property as he may. from time to time, consider necessary to taU pouenion of and to aJ.rUnfe corttrol 0"'" telecommunications, and every

11 such order shall be prima facie evidence that the property to which it relates is required for a public JIU1POSe. H

7.20 The Act defmcs "properly" in Section 63(9) in very broad terms and includes "shares. stock, interests ofall kinds. Including a mortgagee's or chargee's interest in properly" .

7.21 Under Section 63(10) of the Act the Minister has the power to make an order under Section 63 for and on behalf of the Government by statutory instrument with legislative effect.

7.22 Section 67 of the Act provides for roles to be applied when assessing the value of compensation for any acquisition of property. Those rules seek in a number of ways to reduce the value of such compensation. Further, Section 70 of the Act prevents the Government from paying any compensation without National Assembly approval.

7.23 On 2S August 2009, the Belize Telecommunications (Assumption of Control over Belize Telemedia Limited) Order, 2009, Statutory Instrument No 104 of 2009, (the Order)21 was signed by the Minister of Public Utilities compulsorily acquiring, amongst other assets, approximately 94% of tbe slum:s in Telemedia. Part I of the Order provides:

"A - SHARES IN BEUZE TELEMEDIA LlM1TED

Thefo/lowing shares in Belize Telemedia Limited ('Telemedia") held by the. persons shown In the stalUtory return for 2008 flied by Telemedia in the Belize Companies and Corporate Affairs Registry on or about the 5th January 2009. or held by any transferees of the said shares in the event ofany transfers laking plaC(! since the said dale offlling;

Name of Sharellolder Address No. of Shares acquired

1. DB (or BCD) Holdings P.O.Box 1764, BclizeCity 1,234,859 Limited

2. .BTI. Intemationallnc. P.O. Box 71, Tortola, BVI 895,552

3.BTL Investments Limited BTL, St. Thomas Street 750.000

4. EooM Limited P.O.Box 1764, 212 North Front St. Belize 15,178,488 City

5. Mercury Communications P.O. Box 1764,212 North Front St. Belize 4,786,230 Limited City

6. New Horizons Inc. 212 North Front St. Belize City 20,581

7. Sunshine Holdinp Limited P.O. Box 1258,212 North Front St., Belize 11,092,&44

It Is..... C'].

12 City

8. Thiermon Limited 212 North Front St.. Belize City 12,886.959

Total number of Surll acquired 46,845.513

7.24 The Order states that the acquisition was for a public purpose. namely:

"the stabilisation and improvement of the telecommunications industry and the provision of reliable telecommunications services to the public at affordable prices in a harmonious and non-contentious environment".

7.25 The acquisition was published in the Belize Gazette on 2S August 2009.22 A Notice of Acquisition was sent to the fonner shareholders ofTelcmcdia on 27 August 2009.13

7.26 Prior to the Order, Dunkc:ld's interests in Telemcdia were as follows:

(a) Thicnnon Limited (TbiermoD) owned. 26.01% of the shares in Tclemcdia.24 Dunk;eld is the sole sharebolder ofThiennon. Therefore, Dunbld indirectly held legal title to 26.01% of the shares in Telcmcdia;

(b) BCB Holdings Limited (RCB Holdlap)2s owned 2.49"10 of the shares in Telemedia?6 BCB Holdings held these shares on trust for J:>wW:ld. 17 Therefore, Ounkeld owned the beneficial interest in 2.49"" of the shares in Telemedia; and

(c) Ecom Limited (Ecom), Mercury Communications Limited (Mercury) and New Horizons Inc. (New HorboDl) owned 30.63%, 9.66% and 0.04% respectively of the shares in Telemedia.lIl Ecom, Mercury IDd New Horizons are each jointly owned by Northtown Limited and Southtown Limited.29 Northtown and Soutbtown held these shares in Ecom,

Mercury and New Horizons on trust for J:>wW:ld. 30 Tb.cn::fore, Dunkeld owned the beneficial interest in 1000" oftbe shares in &Om, Mercwy and New Horizons which in tum held the legal title to 40.33% ofthe shares in Telemedia.

7.27 Article 1(a) of the Treaty provides:

"(a) "investment" means every kind of asset and in particular, though not exclusively. includes: (i) movable and immovable property and any other property rights such as mortgoges, liens orpJedges;

(ii) shares, stock and debentures 01 cOmpanies or interests in the property ofsuch companies;

(iii) claims to money or to any performance under contract having a finonciai value;

(iv) intellectual property rights and goodwill:

(v) business concessions conferred by law or under contract, including concessions to search for, cultivate. extract or exploit nolural resources. 1/

7.28 Article I (b) of the Treaty provides:

o(b) "returns" means the amounts yielded by an iPIWJStment and in particular, though not exclusively, includes profit. interest. capikll gains, dMdends, royalties orlees. 0

7.29 Articles l(a) and 1(b) of the Treaty confinn that both Dunkeld's legal and beneficial interests in Telemedia are entitled to protection under the Treaty. (See further paragraph 7.43 below).

7.30 For the reasons stated above, the Respondent bas brelcbcd scveraI provisions of the Treaty and certain obligations under customary iotcmationallaw. These are set out below.

7.31 Article S (Expropriation) of the Treaty provides:

"(1) 1'1fVeSt1n1m1l1 of nationals or companies of either Contracting Party shall not be notionolised, expropriated or subjected to measuru having effect equivalent to naliono/isa/ion or expropriation (hereinafter referred to as "expropriation '? in the territory of the other Contracting Party except for a public purpose related 10 the inte17lll1 needa of that Party and agoilUl adequate, prompt and equitable compensation. Such compensation shall amount to the IIWket value ofthe investment expropriated before the expropriation or impending expropriation became public knowledge. slra/l include interest at a normal ComtMrciai rate prescribed by law UItItl tlte date of paytMnt, shall be made without delay, be effectively realisable and be freely traM/erable. The national or company affected ahall have a right. under 1M law of the Contracting party making the expropriation. 10 prompt review, by a judlcMI Of' other independent authority 0/ tIrat Party, 0/ his or its case and of the valuation 0/ his or ils in'II'Utment in accordance with the principles set out in this paragraph.

(2) Where a Contracting Party expropriat" the assels ofQ company which is incorporated or corulilUled under the law in force in any part ofits OWPI territory, and in which nalKmals or compania of the other contracting Party OWPI shares. it shall ensure that the provisions of paragraph (1) 0/ this Article a~ applied to the extent necessary to guarantee the contpenstJtion proVlMd for in tltal pamgraplt in rupect oftlteir investment 10 such no#OflaU or companies ofotMr Contracting Party who are 0""'" o/Ihose shares. " 7.32 The Govcnuncnt has unlawfully purported to expropriate Dunkcld's investment in Telemedia. In so doing, the Government bas violated tbe obligatiODJ in Articlc .5 of the Treaty which it owes to Dunkeld. The nationalisation of Telcmedia wu not carried out ''/or a public purpose related to the internal needs" of Belize. Rather, the Government flexed its legislative muscle to address what was esscntial1y an ordinary commercial conlra¢tUal dispute (namely the dispute with Telemedia relating to the validity of the Acwmmodation Agreement). Indeed, that commercial contractual dispute had already been resolved in the appropriate and agreed upon forum of an international arbitration tribunal (in LelA Award No. 81079). An expropriation. the stated purpose of which was to avoid the Government's contractual obligations, cannot be considered as lawful under intemationallaw.

7.33 Further, even if (which is denied) it could be said that the taking of shares in Telemedia was ',/or a public purpose related to the internal needd" of Belil;e. the provisions which purport to allow for "reasonable compensation" under the Act are patently inadequate and a clear breach of Dunkeld's rights under Article 5(1) of the Treaty to "adequate, prompt and equitable compensation". In particular. the express provision wbich purportJ to exclude any compensation in respect of the Accommodation Agreement (see Section 67(2Xvi) of the Act) is a transparent attempt to deny Dunkeld that to wbich it is properly entitled. Similarly, the Govenunart's entitlement to deduct sums allegedly due as arrears of taxes, duties and charges (lee Section 71 of the Act), in cireumstances where Telemedia has established in LCIA Award No. 81079 its entitlement to apply the specified

taxation rates and set~ff provisions of the; Aceommodation Agxeetncnt is a clear attempt by the Government to deny Dunkeld adequate and equitable compensation as requi.n::d by Article 5 of the Treaty.

7.34 The nationalisation of Telemedia by the Order in accordance with the Act is the manifestation of the abusive exercise of soven::ignpowcr by the Government. It was not carried out ''for a public purpose related 10 the internal needs" of Belize and, in the ablence of "adequate, prompt and equitable compensation", amounts to an unlawful expropriation ofDunkeld'$ investment in violation of Article 5 of the Treaty and applicable rules of cuatomary intemationallaw. No compensation has been paid to Dunkeld. wbcthc:r R:presenting the marlcct value of its investment or at all. Therefore, the expropriation of Dunkeld's investment is an illegal act in breach of Article 5 of the Treaty entitling the Dunkcld to full reparation or its monetary equivalent.

7.35 Article 2 (Promotion and Protection oflnvCltment) of tho Treaty provides:

"(J) Each Contracting Pm1y sMII e1JCOUIYI~ and CNNIte favourable condiliom for nationals or companies ofthe other Contrr.lclinK Porty 10 irrwrn capital in its territory, and, subject to its right to exet'dse powen conferred by ;18 IOWI, and COMisk1flly with its natitHlfli objectives. sltall admit such copUal.

15 (2) Investments 01 nationals or companies 01 either Contracting Party shall at all times be accorded lair and equitable treatment and shall enjoy foil protection and security in the territory 01 the other Contracting Party. Neither COIttracting Party shall in any way impair by unrelUonabie or discriminatory measures the management, maintenance. use, enjoyment or disposal 01 investment., in its territory ofnatiOltaIs or companies ofthe other Contracting Party ... H

7.36 Therefo"" under Article 2 of the Treaty, the Oovomment undertook to accord to Dunkeld's investment 'lair and equitable treatment'. In breach of Article 2 of tile Treaty, the Government has

in several respects failed to ensure that Dunkcld's investments WCIe treated fairly and equitably. The Government's conduct has been grossly unjUit and discriminatory.

7.37 'Il1e Prime Minister gave a lengthy speech to the House of Re:prcsentatives on 24 August 2009 when tabling the Act.31 The Prime Minister made it very clear that the Act was directly aimed at what the Government pen:eived to be the intemltS of Lord Ashcroft:

"As well, we are only acquiring the 94'X or so 01 Telemedia that is controlled by Ashcroft interests. The sltareholding owned by the Belizeans will be left intact.

This is not an ad hominem move; it is to deal with a ItrUcturaJ problem ... This, I repeDt then, is only about Telemedia and no more and no len than a case of the Belizean national interest trumping any other consideration."

7.38 The Government, by the public admission of its Prime Minister, has directly targeted Dunkeld's fomgn investment, while leaving intal;;t the sbarebol<1ing in Tclemcdia owned by Belizean nationals. The Government's actions are discriminatory, wtfair and inequitable. The Government has fallen woefully short of the standards of treatment required of it by Article 2 ofthe Treaty.

7.39 Moreover, the obligation to ensure full security and protection is not merely a restriction on the Government's activities but it also entails positive obligations. This obligation certainly coven the physical security of an invest:malt. This obligation was violated by various actions of the Government, most notably by the Government's nationalisltion ofTelcmcdia.

7.40 Artiele 3 of the Treaty containl a promi.Ie by the Govemment to accord to investors such as Dun.kcld treatment which is no lea favourable than that ac:corded by the Government to other investors of

third States. This most~favoumi-nation (MFN) treatment obligation provides:

"(1) Neitlu!r Cmttracting Party sltall in ttl turitory luqecl investments or returns of 1ItItionais or comptJrlia ofthe other Ctmtractiltg Party to trealme1lt lesslavourable. than that

"C..... C.lf.

18 which it accordJ in the same circunutances to investments or rel:'Unu ofits Own nationals or companies or to i1fve$tmenls or returns ofnationals or companies ofany third State.

(2) Neither Contracting Party shall in ils territory subject nationals or companies of the other Contracting Party, as regards their management, use, enjoyment or disposal of their investments, to treatment Jess favourable than that which it accords in the same circumstances to its own national! or companies or to nationals or compa"ies ofany third State."

7.41 'The Government has aocorded nationals of third States more favourable treatment in, inter alia, its investment treaties with countries besides the UK. Such treaties include:

(a) the Agreement between the Government of the Republic of Austria and the Government of Belize for the Promotion and Protection of Investments, signed on 17 July 200 1 and in force since 1 February 2002 (the Austria-Be'bI BIT);31 and

(b) the Agreement between Belize and the Kingdom of the on Encouragement and reciprocal Protection of Investments, signed on 20 September 2002 and in force sinc::e 1 October 2004 (the Belfze.Netbertaadt BIT).l3

7.42 Amongst other provisions, the Belize-Austria BIT contains the following definition of "investment by an investor ofa Contracting party" in Article 1(2): "(2) "investment by an irrvutor of a Contracting party" means every kind of asset in the territory ofone Contracting Party, owned or controlled, directly or indirectly. by an investor ofthe other Contracting Party, including: (a) an enterprise constiluled or organised llruler the applicable law ofthe first Contracting Party: (b) shares, stocks and other forms ofequity participaliQl' in an enterprise as referred to in subparagraph (a), and rights derived therefrom,· (e) bonds, debentures, loans and other forms ofdebt and rights derived t!terefrom: (d) any right whether conferred by law or contract, including turnkey contracts, C01lCelSions, licencf!3, authoriJatiom or permits to undertake an economic activity; (e) claims to money and claims 10 peifOl'mllrtee pursuant to a contract having all economic value: (f) intellectrul/ JH'fJlN!I"IY rights as defined in the multilateral agreements coru:iuded under the auspices oflhe World Intellectual Property Orgtutil4tion. including indwttrial property rights, copyright, trademarks, patents, industrial designs and technical processes, kn0w­ how, trade secrets. trade name.! and goodwill: (g) any other tangible or intangible, movable or Immovable property, or any related property rigllts. such Q3 lea8ell, mortgages. liens. pledgu or usufructs. "

7.43 Thil i. to be contrasted with the narroWCl' definition of ";nve.rtmenf' in the T~ty which is set out in paragraph 7.27 above Which, inter alia, doca not contain the words "owned or controlled. directly or indiM:tlytl. Therefore, the treatment .:corded by the BeUzo...Austria BIT is arguably more

17 favourable than that accorded by the Treaty. In the event that the Tribunal finds that the definition of "investment" in the Belize-Austria BIT is broader than the equivalent definition in the Treaty. Dunkeld's investment is entitled to the benefit of the fonner protection.

8. THE AMOUNT INVOLVED AND THE RELIEF REQUESTED

8.1 In respect of Dunkeld's claim for expropriation under Article 5(1) of the Treaty, Dunkeld claims:

"adeqUllte, prompt and equitable compensation. Such compensation shall amount to the market value of the ilfWStment expropriated before the expropriation or impending expropriation became public knowledge. shall include interest at a normal Commercial rate prescribed by law until the dale of payment, shall be made without delay, be effectively realisable and be .freely transferable.·.l4

8.2 In the event that the expropriation is found to be unlawful, mdlor finds that the Govcmmcnt's acts were in violation of Articles 2 and 3 of the Treaty, the stuIdard of damages is determined by customary international law. Dunkeld is entitled to be placed in the position in which it would have been had its rights under the Treaty not been violated. Dunkeld is entitled to be paid damages or compensation sufficient to wipe out all of the consequences of the Government's breaches of the TtQty.

8.3 Dwlkeld's damages or IOIJIIe8 will be particularised and quantified in due course through the production of documentary and expert evidence. By way of indication for the purposes of Article 3(3)(e) of the UNCITRAL Rules only, the value of Dunkeld's investment is in the order of 694'AI of BZ$300 - 600 million.3S

8.4 Dunkeld seeks in particulu the following relief:

(a) a declaration that the Government has violated Articles 2, 3 and S of the Treaty, as well as its obligations under general intemationallaw;

(b) an order that the Government make full reparation to DunkeJd for the injury or loss to its investment arising out of the Government'. violation of the Treaty, and applicable rules of intcrnationallaw. such full reparation being in the form of damages or compensation paid to Dunkeld in an amount to be determined, including interat then:on;

(c) an order that the Government pay the costs of these ubitration proceedings including the

COlts of the arbitrators, III well as the legal and other expenses incurn:d by Dunlccld including but not limited to the fees of their lepl COW1IICl, experts and COllIUItants as well as

,. Dunkeld's own employees on a full indemnity basis, plUl interest thereon at a reasonable commercial rate to be determined by the Tribunal; and

(d) any alternative or other relieftbe Tribunal may deem appropriate in the circumstances.

Dated 4 December 1009 '-.

Judith Gill Q.C.! Matthew Gearing I Angeline Welsh

Allen & Overy LLP

Solicitors for the Claimants

1.